What is in this article?:
- How 'fiscal cliff' deal impacts small restaurateurs, franchisees
- Looking at incentives
Some small business operators will see their tax rate rise by almost 5 percent as a result of the "fiscal cliff" deal.
Looking at incentives
Some restaurateurs, however, say they are not particularly concerned about the tax increases. Commenting on the possibility of paying more in federal income tax this year, one New York City operator who wished to remain anonymous observed, “We pay so much in taxes here in New York already, what’s another couple of percentage points?”
Irwin Kruger, owner of ISK Systems, a Long Island, N.Y.-based Smashburger franchisee, said he’s not averse to paying higher taxes. “Increasing taxes on people who can afford them makes sense — it’s the right thing to do in this economy,” he said. “I mean, no one likes paying more taxes, but in light of the situation, I’m okay with it. I think it’s the only way to address some of the immediate issues confronting the economy.”
And despite the continuing sluggish economy, Kruger, a former McDonald’s franchisee, said his three Smashburger outlets are doing record business. "We hope to have 20 open over the next several years," he noted.
In addition to the new tax regulations, the Taxpayer Relief Act also extends several tax incentives for small businesses. They include:
• 15-year building depreciation schedule:Lawmakers extended through 2013 the 15-year depreciation schedule for restaurants, enabling operators to write off spending on new construction and improvements to existing buildings. The original measure set the depreciation schedule at 39 ½ years.
• Work Opportunity Tax Credit: The law extends for one year a tax credit of up to $2,400 annually for operators who employ individuals from targeted communities and persons who are difficult to employ.
• Bonus depreciation: The measure, which also was extended for one year, allows operators to write off a new asset by up to 50 percent in the first year.
And while the industry generally praised lawmakers for extending these tax benefits, there also is some frustration that they all sunset at the end of 2013.
“It’s disappointing they’ve only been extended for a year,” the IFA’s Perron said.